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Trade Secrets Reform on the Horizon?

For the last several years, there have been rumblings about the possibility of a truly unified set of laws for the protection of trade secrets. Well, that day may be right around the corner. Recently, the Senate Judiciary Committee approved the Defend Trade Secrets Act (“DTSA”), which will, if signed into law, amend the Economic Espionage Act of 1996 to create a federal right of action for trade secret theft. The DTSA is the culmination of several years of work by a number of Senators striving for uniformity in US law on the subject of trade secrets and their enforcement.

“Trade secrets” can be found in nearly every segment of the US economy, including the agriculture and animal science industries. A bevy of commercially sensitive information can qualify as trade secrets including scientific, technical, and engineering data and knowhow. Currently, “trade secret” rights are determined on a state-by-state basis, and disputes relating to trade secrets are principally within the domain of state courts. Under our current patchwork of laws, each state has its own requirements for initiating, maintaining and ultimately prevailing on claims relating to the alleged theft or misappropriation of a company’s trade secrets. This has at times lead to inconsistent treatment of determining whether something can qualify as a trade secret and, if so, the provisions of meaningful relief for misappropriation of those assets — particularly when the information crosses state lines or is removed from the United States.

Some recent issues touching limitations on patent protections have further brought to light the value of trade secret protections. The America Invents Act and developments in limiting patent eligibility for diagnostics and biological inventions have caused ag technology companies to reevaluate how to go about protecting their innovations to better ensure company value and competitiveness.

If enacted, the DTSA would represent the most significant trade secret reform in decades. The key aspects of this legislation are that it provides a uniform law on the subject matter of trade secrets and gives federal courts jurisdiction over disputes brought under the Act. Remedies would no longer be limited to state law and would give litigants nationwide scope to injunctions issued under the Act. It also gives litigants the opportunity to recover stolen assets on an ex parte basis. Another key element of the DTSA is a provision that provides for awarding attorneys’ fees to the prevailing party when a claim of misappropriation is brought in bad faith. The current bill also contains provisions to protect whistleblowers who disclose trade secrets to the government or use the information in the context of a retaliation lawsuit. The bill now moves to the full Senate for consideration.